Atwood Oceanics (NYSE:ATW) reported its fiscal first-quarter results after the closing bell on Tuesday. At first glance the headline numbers look awful, as the company's results came in well below what Wall Street was expecting. But the underlying business was a lot stronger than the headline numbers suggested.

Drilling down into the numbers
First, we'll look at the good news. Atwood Oceanics reported revenue of $351.7 million, which was well above last quarter, when the company reported revenue of $323.4 million. It was also well above the $284.7 million the company brought in during its fiscal fourth quarter in 2014. However, revenue was a few million dollars less than analysts were expecting, but this news really wasn't all that bad, as overall revenue growth was strong, especially in the company's ultra-deepwater segment. That segment's revenue increased 21% over last quarter and has jumped 92% over the past year.

The problem this quarter relates to Atwood Oceanics' net income, which fell shapely from prior periods. The company's net income was just $46.2 million, or $0.71 per share, well below the $112.2 million, or $1.72 per share, the company earned last quarter. Earnings were also about half of what Wall Street was expecting, but there's a lot more to the story here.

What went wrong?
The bulk of the earnings impact came from a non-cash impairment charge the company took this quarter relating to its Atwood Hunter deepwater drillship. That charge, which is the result of the rig's being idled as it can't find work in today's low-oil-price environment, totaled a $56.1 million after taxes, or $0.86 per share. Because the rig is unlikely to earn any revenue this year because of the currently weak oil market, the company had to idle it and take an impairment charge. However, if industry activity improves in the years ahead, this rig could be put back to work and again earn money for Atwood. 

In addition to that charge, Atwood recorded a loss on the sale of the Atwood Southern Cross, which amounted to $7.1 million after taxes, or $0.11 per share. The company also sold additional equipment at a loss of $1.8 million during the quarter. These sales didn't bring in much cash and really amounted to just cleaning out some unused assets. 

A better way to look at the quarter
All told, these losses sliced $0.97 from the company's earnings this quarter. If we were to adjust for these losses, Atwood Oceanics would have earned $1.68 per share this quarter, which would have been well above not only previous quarters, but also above what Wall Street was expecting.

Further, Atwood's underlying operating cash flow was strong this quarter. The company's net cash provided by operating activities came in at $194.7 million, which is 23% higher year over year. Overall, the company's cash flow should remain strong this year, thanks to its solid backlog of contracts, as all but one currently operating rig is without a contract for the full year.

Investor takeaway
At first glance, Atwood Oceanics' results looked awful, as the company missed estimates pretty badly. However, by taking a closer look we see that the company had a few outliers this quarter that deeply affected its results. Without those one-time issues, the company's results would have been really strong, which is something we see by looking a little deeper than the headlines.